In this series of articles, we have been suggesting New Year’s financial resolutions that may be appropriate for each stage of life. This article offers three suggestions for New Year’s financial resolutions for individuals in their 50s.

Financial Resolution #1: Make a final push to max out your retirement savings. After a lifetime of diligently saving, you’re getting closer to the day when you hope to actually enter into and enjoy the retirement you’ve been planning. “The 50s represent the stretch right before the final mile or so of a marathon,” says David Lerner Associates Executive Vice President Martin Walcoe. “This is when runners want to prepare for a strong final push that will carry them successfully to the finish line.”

Unlike individuals in their 30s or even 40s, 50-somethings have a much smaller window of time left in which to save and invest for retirement. “In other words, time definitely is not on your side,” says Walcoe. “Therefore, saving as much money as possible for retirement should usually be a primary financial goal during this life stage.”

If possible, consider contributing the maximum amounts allowed by law into your qualified retirement plans. For tax year 2013, the annual IRA contribution limit (for traditional and Roth IRAs combined) is $5,500 (or $6,500 if you’re 50 years of age or over), while the annual 401(k) contribution limit is $17,500 (or $23,000 if you’re 50 years of age or over). Keep in mind that you have until your tax-filing deadline
(April 15th for most people) to make your qualified plan contributions.

Financial Resolution #2: Reexamine your asset allocation mix. Walcoe points out that not only do you have less time in your 50s to save for retirement, but you also have less time to make up for potential losses in your retirement portfolio. “So it may be wise to begin gradually shifting your asset allocation mix away from investments that may feature more short-term volatility (like equities) and toward those that generally have less volatility, such as fixed-income investments (like bonds) and cash equivalents.”

Since fixed-income instruments and cash equivalents generally offer lower return potential than equities, such a strategy could lower your portfolio’s overall return. “But it may also lower risk, which is often important at this life stage — especially as you enter your late 50s,” says Walcoe. “If you haven’t saved as much for retirement by now as you’d hoped to, you might have to accept a higher degree of risk and volatility to achieve the returns necessary to meet your retirement savings goals.”

Financial Resolution #3: Enjoy some of the fruits of your labor. This life stage represents the “sweet spot” for some people: They are in their peak earning years and their children have left the nest and perhaps even finished college. “Therefore, some people in their 50s have more financial flexibility and more discretionary income than at any other time in their lives,” says Walcoe.

While it’s important to try to max out your retirement savings (as noted above) and maybe you should even try to pay down the principal on your home mortgage, Walcoe believes it’s also important to “live a little” during this life stage if your finances permit. “You have probably been working hard your whole adult life to pay the bills and raise your family. If you have done this successfully and are saving diligently for retirement, you might want to splurge a little and take a nice vacation or buy a big-ticket item. It’s all about finding the right balance in your life between financial responsibilities and enjoying the fruits of your labor.”

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities. Member FINRA & SIPC. http://www.davidlerner.com